The metaverse is coming and those who understand it and are prepared for it will reap its rewards. That was the theme of a June 21 panel discussion at The Burnham-Moores Center titled “The Metaverse, How it Impacts Real Estate … and You.”
The panel was moderated by Burnham-Moores Center Executive Director Stath Karras, and included Neel Naicker, co-founder of The Metamall Group; Hugo Swart, vice president and general manager of XM at Qualcomm Technologies; and Geoffrey Kasselman, a partner and senior vice president of workplace strategy for real estate and investment firm CRG.
Karras kicked off the discussion by gauging the audience’s familiarity with the metaverse, with a majority admitting to little knowledge of what it is. A brief video was shown explaining the basic construct of the metaverse as a three-dimensional place inside the internet that is accessed using special visual headsets and other devices worn on the body that enhance the realism of the computer-rendered world. In that world, people become and are viewed as avatars of themselves and can interact with each other as if they are in a room together, even if they are physically apart.
For companies like Qualcomm, the metaverse will offer the same kinds of business opportunities as the mobile internet but will be even more transformational because the applications will be unlike what is widely used today.
“Qualcomm started with the mobile internet. We see the metaverse, or XR as we call it, as the next mobile internet,” Swart said. “When you think about the metaverse, you can be anywhere in the world, interact with anyone in the world as if you were present. I think that’s a much bigger paradigm shift.”
According to the panel, one of the first industries to adopt the metaverse into its business models will be retail. “Retail in the metaverse is pretty easy to get your head around,” Karras said. “This is Amazon on steroids.”
Naicker said that countries like Dubai and United Arab Emirates are investing heavily into the metaverse’s retail potential.
“In real estate, if you’re an owner operator, not only do you have a mall representative in real life you also have a digital representation of that where people from anywhere in the world can come shop. Imagine a world where you can invite your friends to go shopping with you at the Dubai Mall,” he said, before describing how friends or family living in different cities could meet at the mall and shop in the Luis Vuitton store there and purchase a new purse using digital coins and receive a digital version of the bag that can be worn by the shopper’s avatar and be in line for the real one when they become available.
An important part of retail shopping in the metaverse is the use of NFTs (non-fungible tokens), which are created using blockchain technology that provides “exclusivity and authenticity” to items purchased in the metaverse, Naicker said. Metaverse retail will also change the way money is used for shopping around the world.
“Tomorrow, you’ll see the ability to globally shop with tokens,” Naicker said. “I go buy tokens and in retail I use the same coins in Dubai as I do in Paris and London or in Brazil and the fees are miniscule compared to what it is today from the bank fees. All of that is going to come together and the metaverse enables easier action to that.”
In addition to the metaverse providing a 3D world to immerse in and go shopping, the same spatial computing can be used to bring avatars into the real world through holograms, Kasselman said.
“At the car dealership, instead of a salesperson, an Elon Musk hologram sells you the Tesla – or the same could happen in the metaverse,” he said. “That’s the kind of stuff you can expect to see in five years’ time.”
Kasselman said the rapid adoption of the metaverse across industry is certain because investments in the technology and its applications so far is already up to $1.8 trillion. “That’s bigger than Hollywood and Bollywood combined,” he said.
Part of that $1.8 trillion investment is the $100 million Snapdragon Metaverse Fund by Qualcomm Ventures created this year to invest in metaverse content creators.
“It’s a big bet Qualcomm is making,” Swart said, adding that the fund was created not necessarily to make money but to get feedback from the market to inform Qualcomm on what chips to build and help the industry “move forward.”
Qualcomm’s role in the metaverse industry will primarily be to make processors and create technology for spatial computing, as well as make reference designs for customers to build the hardware and invest in the ecosystem, Swart added.
“I believe this is an opportunistic moment for all of us in some form or fashion,” Kasselman said. “If you can’t make money in the metaverse, make it on the metaverse – and there are wonderful opportunities in either direction.”
Disrupting Office Space
The traditional office space has already been disrupted by the COVID-19 pandemic, and the panel predicted the metaverse will only continue the trend.
“I can see a world where the office is completely virtual, but you show up every day,” Karras said.
The metaverse’s virtual office offers a solution for managers who want to offer work-from-home but still have the employee interactions an office provides but does not help lower vacancy rates at office buildings that have been hallowed out by the pandemic.
Kasselman pointed out that right now in Chicago, office space occupancy is at around 40-50%.
“How are we going to get back to 90% or 80%?” he said and offered two possible ways that it could happen.
One is that office space in the future will becomes studio space equipped with “CGI, green screen, hologram, avatar and immersive metaverse experiences that can be broadcast across your enterprise.”
The other is a “deconversion” where codes for office spaces will be rewritten to allow mixed uses such as vertical warehouse space. Kasselman said real estate investors should “bet more heavily” on mission critical data centers and industrial, which will have “more permanence” in the long run. He also suggested that office buildings could monetize space with 5G small scale data centers on the peripherals of the property.
‘Digital Twin’ Properties
Naicker said the biggest future opportunity for commercial real estate is in “digital twins” of properties in the metaverse.
“Commercial real estate is $70 trillion business but is one of the least liquid – it takes time to sell and get liquidity,” he said. “A digital twin allows prospective tenants or buys to get analysis in real time to be able to figure out future of building and transact globally. For real estate it’s very exciting because now you’ll have not just somebody come in from the next city or fly in to [view property], you can have people across the world see it in this immersive environment with all the information that you can pull – accounting, leasing, all of it – in real time.”
Naicker said that virtual offices in the metaverse will be so life-like, people will be able to see coworkers’ facial expressions in meetings they sit in.
“The owners can market this everywhere,” Naicker said. “If you have a digital twin, you can reach more people.”
Kasselman said he has been trying to convince his own company to be the first to offer a digital twin with every new building that it constructs. He said he is currently pitching a $250 million manufacturing plant to a European company and attempting to differentiate his sales pitch by building a digital twin of the concept as it is right now and gift it to the company. If picked, his company will build out the physical plant and the digital twin as a package.
“You get both if you’re our customer,” he said. “The bricks and mortar is better with its digital twin and the two will sell for more, or lease for more, as a package than either will individually. There are use cases for owner operators and tenants. There’s something in it for everybody.”
Swart pointed out that many of the use cases in the metaverse that are helpful in real estate are already available. Using virtual reality or augmented reality, architects or perspective real estate buys can do things like overlay potential changes to a home or building; or peel away walls to look at the plumbing and wiring behind them; or even just visit the property and walk around in it virtually to get a feel for it.
“These are things that are here today. Yeah, in five, ten years it’s going to get much better, but I think the message is you don’t have to wait five years, there’s a lot available already today to start engaging the metaverse,” he said.
In the Q&A segment of the discussion, one real estate professional brought up his concern over how metaverse properties will be valued, because “land” in the metaverse is infinite. Kasselman said scarcity will be created by a market demand for popular destinations in the virtual world.
“In the metaverse, there will be winning locations and losing locations,” he said. “And there will be limited supply in the virtual communities imbedded in the metaverse where everybody wants to be because whatever is cool or hip or has energy or whatever made the place, is where people are going to come. And that community will have a finite amount of virtual NFT-backed real estate to sell you or lease you and there will be more demand than there will be supply.”
Naicker said that there are companies that already sell land in the metaverse that doesn’t exist in real life “and people are paying millions for property.” He added that companies like McDonald’s, UBS and other banks are already in the metaverse.